SCO has decided to give some more money to its executives and employees in the way of salary increases, the stock options we already noticed, and some bonus possibilities as well. Hey, when you've got it, flaunt it. Here's the new 8K, which explains the plans.

There is a new sales compensation plan for 2006, so employees can earn quarterly commissions and "bookings bonuses", and the description of the Sales Plan is filed as an attachment. Unless I am misreading, I gather salesmen can get bonus points for selling MySQL. Non-sales employees can shoot for target bonuses, quarterly cash bonuses.

What drew my eye the most though is the part that tells who qualifies for these stock options:

On January 23, 2006, the Compensation Committee of the Board adopted a revised Form Notice of Grant of Stock Options (the “Form Grant Agreement”) for The SCO Group, Inc. 2002 Omnibus Stock Incentive Plan (the “Incentive Plan”). The Form Grant Agreement is used to grant to employees, non-employee members of the Board or the board of directors of any parent or subsidiary of the Company and consultants a specified number of options that may be exercised at the exercise price specified therein, in accordance with the terms of the Incentive Plan. The Form Grant Agreement also provides for the issuance of either incentive stock options or non-qualified stock options and a specified vesting schedule and expiration date for the stock options. The Form Grant Agreement has substantially the same terms as the Form Notice of Grant of Stock Options previously used, except for changes that were deemed necessary to make the Form Grant Agreement more consistent with the Incentive Plan, including the provision governing how certain corporate transactions will impact the holders of outstanding stock options.

The link and the highlighting is added by me. And the agreement itself adds this:

The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board or the board of directors of any Parent or Subsidiary and consultants who provide services to the Corporation (or any Parent or Subsidiary)....

AA. - Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

I wonder who these favored consultants are. And who are SCO's "Parent" or "Subsidiary Corporations"? Hey, PIPE Fairy, is this how you intended your money to be spent?

[Update:I found a list of their subsidiaries, in an exhibit attached to their 10K, which they have also just filed.]

Not to worry. There is an ethics clause:

7.0 ETHICS

Any participant who manipulates or attempts to manipulate the Bonus Plan for personal gain at the expense of customers, other employees, or Company objectives will be subject to appropriate disciplinary action, up to and including termination of employment.

They've got new terms regarding what happens in the event of a "corporate transaction":

Special Termination of Option .

(a) In the event of a Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation or parent thereof in connection with such Corporate Transaction.

(b) If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.

(c) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure assets.

And here's a clause that gives the company certain rights to buy back the stock:

10 . REPURCHASE RIGHTS . ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT.

They also filed two S-8s, and the consent from KPMG, their ex-accounts, attached to this S-8, says this:

Consent of Independent Registered Public Accounting Firm

The Board of Directors of
The SCO Group, Inc.:

We consent to the use of our report dated February 18, 2005, except as to Note 16, which is as of March 11, 2005, with respect to the consolidated balance sheet of The SCO Group, Inc. as of October 31, 2004, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity and cash flows for the years ended October 31, 2004 and 2003, and the related financial statement schedule, incorporated by reference in the registration statement.

On January 23, 2006, the board of directors (the "Board") of The SCO Group, Inc. (the "Company") approved the following actions relating to executive officers of the Company.

Increase in Annual Base Salary and Potential Bonus. The Board increased the annual base salary of Ryan E. Tibbitts, General Counsel and Corporate Secretary of the Company, from $145,000 to $160,000. The Board also increased the annual base salary of Sandeep Gupta, Chief Technology Officer of the Company, from $140,000 to $150,000. The Board also increased the target bonus to which Mr. Gupta may be entitled from 20 percent of his annual base salary to 40 percent of his annual base salary. The salary increases of Mr. Tibbitts and Mr. Gupta and the increase in potential bonus for Mr. Gupta are all effective as of November 1, 2005.

Stock Option Grants. The Board approved stock options to purchase shares of the Company's common stock pursuant to the 2004 Omnibus Equity Incentive Plan to the executive officers named below. Each of the stock options, as provided in the Executive Officer Stock Option Agreements, dated as of January 23, 2006, between each executive officer and the Company, has an exercise price equal to the fair market value on the date of the grant, and will expire ten years from the date of grant. The first 25 percent of the option shares vest upon the first anniversary of the date of grant and the remaining option shares vest over the following three years on a monthly basis so long as the executive officers remain in service with the Company. However, option vesting will accelerate upon a change in control of the Company and upon the declaration by the Board of the payment of a certain dividend to the common stockholders of the Company.

The SCO Group America Compensation Plan for Fiscal Year 2006. The Board approved The SCO Group America Sales Compensation Plan for fiscal year 2006 (the "Sales Plan"), effective as of November 1, 2005. Pursuant to the Sales Plan, participants will have the opportunity to earn quarterly commissions.

Each participant in the Sales Plan will be assigned a quarterly quota based upon a single revenue number. In addition, each participant will have the opportunity to earn quarterly accelerators for additional revenue achieved in excess of their quarterly quota. Quarterly accelerators range from a minimum of 3% to a maximum of 10%.

In addition to the attainment of quarterly accelerators, participants are eligible to receive a bookings bonus of $2,000 - $5,000 for meeting specified conditions in the Sales Plan relating to UNIX products, and a 10% bookings bonus for Me INC subscription sales. In addition to the bookings bonuses, participants are eligible to receive a $5,000 bonus for new UNIX accounts meeting certain criteria. Quarterly quota targets are established by the Senior Vice President of the UNIX Division and the CFO.

This description of the Sales Plan is subject to, and qualified in its entirety by, The SCO Group America Sales Compensation Plan for fiscal year 2006 attached to this Current Report on Form 8-K as Exhibit 99.1.

The SCO Group Employee Incentive Bonus Program for Fiscal Year 2006. The Board adopted The SCO Group Employee Incentive Bonus Program for fiscal year 2006 (the "Bonus Program"), effective as of November 1, 2005 for all non-sales employees. Pursuant to the Bonus Program, eligible employees, including certain of the executive officers identified in the table below, may earn quarterly cash bonuses.

The target bonus for each eligible employee will be comprised of three components: (1) 40% related to revenue, (2) 40% related to operating performance, and (3) 20% related to personal objectives. A bonus under the Bonus Program may be paid for any quarter of fiscal year 2006 if at least one or more of the above components are attained. Personal objectives for Mr. McBride, the Company's President and Chief Executive Officer, are established by the Compensation Committee, and personal objectives for the other executive officers are established by Mr. McBride.

This description of the Bonus Program is subject to, and qualified in its entirety by, The SCO Group Employee Incentive Bonus Program for fiscal year 2006 attached to this Current Report on Form 8-K as Exhibit 99.2.

Potential Bonuses: The potential bonus amounts that may be earned by all executive officers for the 2006 fiscal year under the Bonus Program and the Sales Plan, if the Company attains revenue and operating performance targets at 150 percent and the executive officers satisfy all other personal objectives, are as follows:

The Company also entered into, with Mr. Negris and Mr. Gupta, the Company's standard form of change in control agreement (the "Agreement"), effective as of January 23, 2006. Pursuant to the terms of each Agreement, Mr. Negris and Mr. Gupta agree that they will not voluntarily leave the employ of the Company in the event any individual, corporation, partnership, company or other entity takes certain steps to effect a Change in Control (as defined in the Agreement) of the Company, until the attempt to effect a Change in Control has terminated, or until a Change in Control occurs.

If Mr. Negris or Mr. Gupta is still employed by the Company when a Change in Control occurs, any stock, stock option or restricted stock granted to Mr. Negris or Mr. Gupta, as applicable, by the Company that would have become vested upon continued employment by Mr. Negris or Mr. Gupta shall immediately vest in full and become exercisable notwithstanding any provision to the contrary of such grant and shall remain exercisable until it expires or terminates in accordance with its terms.

Mr. Negris and Mr. Gupta shall each be solely responsible for any taxes that arise or become due pursuant to the acceleration of vesting that occurs pursuant to the Agreement.

The foregoing summary of the Change in Control Agreements is subject to, and qualified in its entirety by, the form of Change in Control Agreement, which was previously filed with the Securities and Exchange Commission on December 16, 2004, as Exhibit 99.1 to the Company's Current Report on Form 8-K.

Form Notice of Grant of Stock Options for the 2002 Omnibus Stock Incentive Plan

On January 23, 2006, the Compensation Committee of the Board adopted a revised Form Notice of Grant of Stock Options (the "Form Grant Agreement") for The SCO Group, Inc. 2002 Omnibus Stock Incentive Plan (the "Incentive Plan"). The Form Grant Agreement is used to grant to employees, non-employee members of the Board or the board of directors of any parent or subsidiary of the Company and consultants a specified number of options that may be exercised at the exercise price specified therein, in accordance with the terms of the Incentive Plan. The Form Grant Agreement also provides for the issuance of either incentive stock options or non-qualified stock options and a specified vesting schedule and expiration date for the stock options. The Form Grant Agreement has substantially the same terms as the Form Notice of Grant of Stock Options previously used, except for changes that were deemed necessary to make the Form Grant Agreement more consistent with the Incentive Plan, including the provision governing how certain corporate transactions will impact the holders of outstanding stock options.

The terms and conditions of the revised Form Grant Agreement filed as Exhibit 99.3 to this Form 8-K are hereby incorporated by reference herein and replace the prior Form of Notice of Grant of Stock Options for the Incentive Plan filed as Exhibit 10.13 to the Company's Form 10-K, filed on April 1, 2005.